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Kansas State University
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Source: Jon Wefald
Note to editors: Because this is a legal matter, there will be no further comment from K-State
News released by news services: Cheryl May, 785-532-6415, may@k-state.edu
PDF of court filing

Wednesday, May 20, 2009

K-STATE FILES SUIT ASKING COURT TO DECLARE SECRET AGREEMENT INVALID

MANHATTAN -- Kansas State University and its athletic corporation are filing suit today, asking a court to declare invalid a secret agreement signed by Bob Krause, its former athletic director, and by former head football coach Ron Prince for a company called In Pursuit of Perfection, LLC. The secret agreement was signed without the knowledge of anyone else at K-State, according to K-State President Jon Wefald.

If determined to be valid, K-State's athletic corporation would have to make $3.2 million in deferred compensation payments to In Pursuit of Perfection between 2015 and 2020.

In addition to other legal claims, K-State argues that Ron Prince's attorney, Ohio sports agent Neil Cornrich, impermissibly negotiated this secret agreement without involving attorneys for the university. K-State contends that, under attorney ethical rules, Cornrich was required to obtain permission from K-State lawyers before negotiating directly with Krause.

Interim athletic director James Epps issued the following statement:
"On May 11, 2009, I learned of a secret deferred compensation agreement that Bob Krause apparently negotiated with Ron Prince's attorney. This alleged deal was made without the knowledge of anyone else in the athletics department, including its attorney. This deal was apparently constructed as a further supplement to the buyout provision contained in Prince's employment contract. I do not know why any additional supplement was justified, or why Bob Krause concealed this agreement from everyone until it was inadvertently discovered last week.

"I do not believe that this agreement is valid, and the athletics department will vigorously fight any attempt to enforce it."

K-State President Jon Wefald said, "I learned shortly after Jim Epps about the secret deferred compensation agreement between Bob Krause and Ron Prince's attorney. I was shocked and saddened to find out about this agreement. No one in central administration or athletics knew about this agreement. We all thought that the August 2008 press release accurately described Ron Prince's one year contract extension and his salary increase from $750,000 to $1.1 million. We thought that any compensation he was owed was in that contract. We had no knowledge whatsoever of this secret agreement between August 2008 and May 2009, and it was therefore unavailable to the auditors, Grant Thornton, who were retained by the Board of Regents to do an exit analysis.

"After Jim Epps and I learned about the secret agreement, we spent several days explaining to Ron Prince and his agent why they should consider the agreement was null and void. That failed. We believe that this secret agreement made between Bob Krause and Ron Prince's attorney is null and void and we will act accordingly.

"This has happened on my watch. I appointed Bob Krause to be athletic director. He has been a longtime friend. I regret deeply and apologize that this happened while I was president. But we do regard this secret agreement as null and void. Like the Interim AD Jim Epps and his staff, we have been completely caught off guard.

"I have asked for Bob Krause's resignation as director of economic development for the K-State Olathe Innovation Campus and he has resigned, effective today.”

K-State discovered the secret agreement May 11, 2009, while responding to routine informational requests in a lawsuit involving one of its former assistant football coaches.